Wal-Mart price war: Indie bookstores fight back
Slashing the cost of new hardcover books to $8.99 is “illegal predatory pricing,” The American Booksellers Association said yesterday, and called for a Justice Department antitrust investigation into Wal-Mart, Amazon and Target, reports Publishers Weekly.
Noting that “this episode was precipitated” by Amazon’s “below cost” pricing of e-books for its Kindle electronic reader, the ABA also requested government scrutiny of the small but fast-growing digital segment of the publishing industry.
The ABA, which represents independent booksellers, sent a letter to the Justice Department warning that such pricing for new hardcover books, such as Sarah Palin’s Going Rogue or Stephen King’s Under the Dome, “is damaging to the book industry and harmful to consumers,” according to a story in The New York Times.
By treating new blockbuster hardcovers as “loss leaders,” charged the ABA, the big three discounters are attempting to “win control of the market for bestsellers.” Retailers pay publishers half the cover price for new books. That’s $17.50 for a $35 book like King’s Under the Dome, making Amazon’s discounted price of $9 far below cost.
“What’s so troubling in the current situation is that none of the companies involved are engaged primarily in the sale of books,” says the ABA letter. And yet, “the entire book industry is in danger of becoming collateral damage in this war.”
The ABA warned such prices are “devaluing the very concept of the book. Authors and publishers, and ultimately consumers, stand to lose a great deal if this practice continues and/or grows.” It endangers independent bookstores, where “hand selling” by knowledgeable clerks to regular customers can turn otherwise neglected books into bestsellers.
“For our members-locally owned, independent bookstores-the effect will be devastating,” says the ABA’s letter. “There is simply no way for ABA members to compete. The net result will be the closing of many independent bookstores, and a concentration of power in the book industry in very few hands.”
The price war started last week when Wal-Mart announced it would sell 10 hot new hardcover books at $10 through its website. Amazon immediately matched the price on select pre-ordered books, forcing the price down to $8.99 at Wal-Mart and $9 at Amazon. Target joined the battle on Monday, pricing the same titles at $8.99 for books pre-ordered on its website.
The ABA, which asked for a meeting with Justice Department anti-trust lawyers “at your earliest convenience,” called the pricing practices of Wal-Mart, Target and Amazon “catastrophic.”
“If left unchecked, these predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public, and will allow the few remaining mega booksellers to raise prices to consumers unchecked.”
To read the entire ABA letter, click here.